DWF Labs-Linked Firms Sue BitGo for $141 Million Over Early Token Sales
Key Takeaways
- •DWF Maas and Falcon Digital, two companies tied to DWF Labs, are suing BitGo for $141 million in London's High Court over the alleged early sale of locked-up tokens.
- •BitGo allegedly moved Falcon Finance and ESPORTS tokens to exchanges about two months before the first unlock date, despite receiving them at a discount in exchange for a commitment not to sell until lock-up and vesting periods expired.
- •The plaintiffs argue that early selling into thinly traded markets drove down the value of tokens they still held, and they went to court after BitGo failed to provide assurances when the issue was raised in April and May.
- •BitGo, one of crypto's largest custodians with roughly $5 billion in assets under custody, declined comment, and none of the allegations have been tested in court.
- •Both parties have links to World Liberty Financial: DWF Labs bought $25 million of WLFI tokens last year, while BitGo custodies the reserves behind the project's USD1 stablecoin, a role World Liberty is moving to take over via its newly approved trust bank.
Two companies tied to crypto market maker DWF Labs have sued digital asset custodian BitGo for $141 million, alleging the firm sold locked-up tokens ahead of schedule and eroded their value. The dispute is now before London's High Court.
DWF Maas and Falcon Digital filed the suit, which the Financial Times reported on Friday. The firms accuse BitGo of breaching the terms of a private, over-the-counter token deal involving Falcon Finance (FF) and ESPORTS tokens.
According to the report, BitGo had received the tokens at a discount in exchange for a commitment not to sell them until lock-up and vesting periods had expired. The custodian instead moved the tokens to exchanges roughly two months before the first unlock date, the newspaper said. Lock-up and vesting schedules are a standard feature of private token sales, designed to keep early holders from releasing large supplies into thinly traded markets before projects mature.
DWF argues that selling into a thin market created heavy downward pressure, eroding the value of the tokens it still held. The firms say they raised the issue with BitGo in April and May, and went to court after the company failed to provide assurances.
BitGo declined to comment on the litigation, per the report, and none of the allegations have been tested in court.
The clash pits two institutional heavyweights against each other. BitGo is one of the crypto industry's largest custodians, with roughly $5 billion in assets under custody, providing custody and settlement infrastructure for institutional clients. The company went public on the New York Stock Exchange this year at around a $2 billion valuation and recently acquired NYDIG's institutional trading arm. The allegations touch directly on the role that has made BitGo a fixture of institutional crypto: safeguarding assets and honoring the terms under which it holds them.
DWF Labs, headquartered in Dubai, is a prolific market maker and investor across the token economy, known for taking sizable positions in tokens issued by crypto projects.
A notable thread ties the warring parties together: both have links to World Liberty Financial, the Trump-family-backed crypto venture. DWF bought $25 million of World Liberty's WLFI token last year, and BitGo custodies the reserves behind the project's USD1 stablecoin — a role World Liberty is now moving to take over through its own newly approved trust bank. With none of the allegations yet tested, the early rounds of the High Court proceedings will offer the first public airing of the firms' claims.
